Krediid

Krediid is the provision of money or goods by a lender to a borrower with an agreement to repay, typically with interest. In everyday usage, it refers to financial loans and other forms of credit extended to individuals, households, or businesses. The term is used in many languages; in Estonian, krediit is the common term for credit and lending arrangements.

Common forms include consumer credit for personal purchases, mortgage or housing loans, business credit for companies, and microcredit for small loans. There are also revolving credit facilities, such as lines of credit, which allow ongoing borrowing up to a set limit and require periodic repayments.

How it works: lenders provide funds up front, the borrower agrees to repay according to a schedule and at agreed interest rates. The cost of credit depends on interest rates, fees, and the term of the loan. Lenders assess creditworthiness using income, employment history, existing debt, and sometimes credit scores. A borrower's repayment history is typically reported to credit bureaus, influencing future access to credit.

Regulation and consumer protection: many jurisdictions regulate credit agreements, require clear disclosures of terms, and provide remedies for default. Interest rates and fees may be subject to caps or oversight, and borrowers may have rights to early repayment without penalties in certain cases.

Impact and considerations: access to credit can enable major purchases and business investment but can also lead to financial distress if mismanaged. Responsible borrowing, clear agreement terms, and understanding total cost of credit are important for borrowers and lenders alike.